Pakistan rejects terrorism "in all its forms and manifestations", President Pervez Musharraf said last night after talks with Prime Minister Tony Blair.

Mr Musharraf also said he would be addressing his country in the next few days on what further steps he will take in relation to terrorism and promised to analyse a list of 20 terror suspects India claimed Pakistan was harbouring.

The apparent breakthrough in the international bid to defuse tension between India and Pakistan which has brought the region to the brink of war came after talks in the Pakistan capital of Islamabad.

India blames terror groups it says Pakistan sponsored for the bombing of a regional assembly in October and a gun attack on its national parliament last month, as part of a long running dispute over the divided Kashmir province.

Mr Musharraf told reporters: "Pakistan rejects terrorism in all its forms and manifestations and Pakistan has fully co-operated with the international coalition against terrorism."

The president said that he had assured Mr Blair that Pakistan was ready to enter talks to defuse and de-escalate the situation in the region.

He said he had told the Prime Minister there was a dangerous military build-up on the border.

"I have also made known our policies of restraint and responsibility," added Mr Musharraf.

The Pakistan president's statement followed Mr Blair's talks with his Indian counterpart yesterday.